No one available to work’: How labour woes are crimping our economy’s prospects

Wednesday, September 5, 2018

I hope no one thinks Canada’s only economic problems are NAFTA and pipelines. If those two issues magically disappeared, we’d be obsessing over a different crisis: an embarrassing inability to take maximum advantage of an impressive run of global economic growth.

Our notoriously weak commitment to productivity and innovation has caught up with us. The latest evidence comes in a new report from Business Development Canada (BDC), which finds that about 40 per cent of the country’s smaller companies are struggling to find workers.

As demographers predicted, Canada’s labour pool is shrinking because more men and women are retiring than are joining it. Not so long ago, the ratio of retirees to younger workers was one to two; it now is one to one, according to Pierre Cléroux, chief economist at BDC.

“What does that mean? It means it’s a limit to growth,” he said in an interview at the agency’s headquarters in Montreal last week. “They refuse contracts. They refuse orders. Exporters are not exporting as much as they could because they don’t find people to work for them.”

This phenomenon can create cognitive dissonance. The jobless rate in July was 5.8 per cent, the lowest in contemporary history, according to Statistics Canada records that date to the mid-1970s. Prime Minister Justin Trudeau and his cabinet ministers like to boast about having orchestrated the lowest unemployment rate in at least 40 years.

However, it’s easier to achieve a low jobless rate when the labour force is shrinking and the number of workers is increasing. The excitement about record employment distracts from the fact that companies could be doing so much more. BDC reckons that a company that is afflicted by labour shortages faces a significant risk of getting stuck in a low-growth trap, constantly turning away orders and correcting the mistakes of ill-trained or overworked staff.